Good day, ladies and gentlemen, and thank you for standing by. Welcome to the EHang Second Quarter 2025 Earnings Conference Call. Please note that the management's prepared remarks and the subsequent Q&A session will primarily be conducted in Chinese, and the corresponding simultaneous or consecutive interpretation can be accessed on the English line. As a reminder, all translations are for convenience purposes only. In case of any discrepancy, the management's statement in the original language will prevail. To listen to the original remarks by the management, please join the Chinese line. Additionally, both the Chinese and the English lines are open for questions, and today's call is being recorded. Now, I will turn the call over to Anne Ji, EHang's Senior Director of Investor Relations. Ms. Anne, please proceed.
Hello, everyone. Thank you all for joining us on today's conference call to discuss the company's financial results for the Second Quarter of 2025. The earnings release is available on the company's IR website. Please note the conference call is being recorded, and the audio replay will be posted on the company's IR website. On the call today, we have Mr. Huazhi Hu, our Founder, Chairman, and Chief Executive Officer, Mr. Zhao Wang, Chief Operating Officer, and Mr. Conor Yang, Chief Financial Officer. Before we continue, please note that today's discussion will contain a forward-looking statement made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The forward-looking statement involves inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today.
Further information regarding this and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Also, please note that all numbers presented are in RMB and are for the Second Quarter of 2025, unless stated otherwise. With that, let me now turn it over to our CEO, Mr. Huazhi Hu. Please go ahead, Mr. Hu.
Hello, everyone, and thank you for joining us today. We're pleased to report on our strong performance this quarter. We successfully delivered 68 units of our EH216 series, generating total revenues of RMB 147 million, representing 44.2% year-over-year growth and a 4.6x rebound from last quarter, clearly demonstrating the continuous market demand and our robust operational momentum. Our order book in this quarter also reflected a strong momentum with new orders of over 150 units for the EH216 series, again demonstrating robust market interest and confidence in our products. These orders will be fulfilled in batches in the coming quarters. Today, there are more than 40 dedicated operation sites across China of the EH216-S, with coverage continuing to grow, highlighting our expanding commercial momentum. In the first half of 2025, the EH216-S completed over 10,000 safe flights without a single incident, underscoring its proven safety and reliability.
This exceptional safety record not only reinforces our reputation but also establishes a solid foundation for scaling up commercial operations in the future. Two certified operators, Guangzhou EHang General Aviation and Hefei Heyi Aviation, have already commenced a trial commercial operation of human-carrying flights in Guangzhou and Hefei. They aim to officially open the service to the public within the year, offering more people the opportunity to experience pilotless eVTOL flights. 2025 marks a landmark year at the beginning of commercial eVTOL operations in China. As the industry pioneer and first operator of pilotless human-carrying eVTOLs, we understand that building a commercial aviation operation goes beyond technology. It demands a robust safety framework, seasoned operational teams, and comprehensive expertise. That's our focus for this year: setting standards, building operational models, and cultivating talent. We're confident that this foundational approach will drive the company's long-term sustainable growth.
Turning to our supply chain, as the leading participant in the low-altitude economy of the eVTOL ecosystem, EHang has adopted a strategy of multi-channel collaboration and diversified deployment. We continue deepening joint R&D with top-tier upstream partners to consistently enhance the performance and reliability of our aircraft. For instance, with respect to our propulsion system, we deepened our partnership with Gotion High- Tech in June , teaming up to develop a customized cylindrical battery solution, leveraging their advanced 46-series cells. These batteries are known for their high energy density, robust power output, and versatility. This new system is designed to improve the EH216 series with longer range, better power output, and greater safety. Going forward, we plan to extend this partnership to more of our eVTOL models, working with Gotion High-Tech to build power solutions that are more reliable, efficient, and eco-friendly.
In the area of airframe freight systems, in July, we entered a strategic partnership with MINT Group, a global leader in automotive exterior and structural components. MINT serves over 70 major auto brands worldwide with a strong supply chain and exceptional R&D and manufacturing capabilities. Together, we will co-develop high-safety airframe solutions for EHang's eVTOL products. These include scalable production of lightweight cabin components and advanced human-machine interface systems. Through this collaboration, we can streamline airframe production at scale and build a more integrated, efficient supply chain for the low-altitude aviation ecosystem. On the product front, we continue ramping up our R&D and innovation efforts, enriching our product lineup and upgrading performance. Our VT35, a long-range lift and cruise pilotless passenger eVTOL, is a key focus this year. Flight tests are progressing very well, and we plan to debut the VT35 in September.
While the EH216 is ideal for intercity operations, the VT35 is designed specifically for intercity travel. Both aircraft are essential elements in delivering a holistic air mobility ecosystem. We're also accelerating the path to industrializing VT35 through deepened collaboration with local governments. Recently, we expanded our collaboration with Hefei Municipal Government, signing a strategic cooperation agreement to establish the VT35 series product hub in Hefei. This hub will integrate R&D, manufacturing, airworthiness certification, supply chain management, sales and operations, and training. The Hefei Government plans to support EHang with approximately RMB 500 million through aircraft orders, investments, and industry ecosystem development, all aimed at building out a robust low-altitude economic ecosystem. On the R&D front, we remain committed to collaborating with leading academic institutions to advance critical technologies in the low-altitude economy. In July, we established the Tsinghua University EHang Joint Institute for Low-Altitude Aviation Technology with Tsinghua University.
This follows the February launch of the Aerospace and Intelligence Manufacturing Committee of the Tsinghua University Guangzhou Alumni Association. By combining Tsinghua's academic research capabilities with our practical expertise in developing and commercializing low-altitude aircraft, the joint institution is designed to accelerate innovation, foster emerging talent, and expedite industrial transformation of this emerging sector. As a pioneer in this industry, we not only focus on product and technology innovation but also actively participate in shaping regulatory and safety standards. We have contributed to CAAC eVTOL airworthiness standards, led the drafting of the Vertiport technical requirements, and helped to promote low-altitude data security guidelines. Our deep involvement spans multiple key areas, including airworthiness certification for civil unmanned aerial vehicles and propulsion systems, Vertiport technology requirement, operational safety regulations, training systems, and operational service standards.
These efforts not only underscore our leadership in technology and application but also reinforce our deep commitment to building a safe, standard, thriving, and sustainable commercial development of the low-altitude economy industry. In the second half of this year, we have refined our strategy. Instead of accelerating order deliveries, we are placing top priority on providing support services to our existing customers, ensuring that the eVTOL aircraft they have purchased can enter safe, orderly, and regular commercial operations. It's not that we lack orders or our production capability; in fact, we have both. In aviation, haste can undermine safety and sustainability. We believe in displaying and long-term value creation rather than chasing short-term gains. Our goal is to establish a proven, scalable business model, one that defines a new chapter for pilotless eVTOL and sets the foundation for enduring success.
We firmly believe that safety, regulatory compliance, and innovation are the cornerstones of leadership in this rapidly developing market. We will continue to advance steadily and lead the industry towards scalable, sustainable commercialization. I will now hand it over to our COO, Zhao Wang, for operational updates.
Thank you, Mr. Hu. We were able to quickly turn the backlog of customer-demanding Q1 into actual deliveries in Q2. While Q1 presented headwinds, our performance rebounded strongly in Q2, both in terms of our orders fulfilled and revenue, bringing us back on a healthy growth trajectory. We're also seeing our customer base continue to expand. This quarter, we delivered aircraft to 13 enterprise clients across China, from Guizhou, Jilin, Jiangxi, Hainan, Gansu, and Yunnan, and more areas, as well as to an international client in Japan.
This growing global confidence in our pilotless eVTOL solutions continues to broaden our market presence and strengthen our operational footprint. In the Second Quarter, new orders also picked up significantly. We received new orders for more than 150 units of the EH216 series, including from Anshun City, Guizhou Tourism Group, Jialing, Xichong, Yilong High-tech Zone, Nanchong City, and Guangxi Guangpu Low Altitude Economy Company and the FUMA Group in Lingao, Hainan. These orders will be fulfilled in a planned and phased delivery. This strong demand highlights the rapid expansion of China's low-altitude economy and demonstrates EHang's growing competitive edge. At the same time, we are supporting our regional clients to prepare eVTOL operations that are tailored to their local environments. Whether it's in scenic areas, urban centers, islands, high altitude, or cold weather regions, we are helping design deployment plans that reflect each location's unique climate and terrain.
Our goal is to enable diverse use cases, such as low-altitude sightseeing, urban air transport, and emergency response across a wide range of real-world scenarios. In the first half of 2025, we completed over 10,000 flights across multiple scenarios in different regional settings, further validating our operational readiness. With the deployment of China's economy, eVTOL applications are becoming increasingly diversified. In particular, the demand for emergency management use cases and smart city management, such as firefighting, rescue, logistics, and surveying, is growing gradually. Local emergency authorities across China at all levels have begun conducting tests and drills using low-altitude aircraft. To address this emerging low-altitude emergency rescue market, we are accelerating product upgrades and commercialization of emergency rescue aircraft. On June 27th, we showcased a new model of the EH216 series for high-rise firefighting in Beijing's Fangshan District, which received strong recognition from government and fire authorities.
Further aircraft refinement and flight testings are currently underway. On the operational front, following the issuance of R OC in late March, the operators in Guangzhou and Hefei, EHang General Aviation and Hefei Hui Aviation, have adopted a safety-first, steady expansion approach, gradually transitioning from trial commercial operation of human-carrying flights to safe, stable, and regular commercial operations. To date, both operators have completed over 700 pilotless flights without any incidents or regulatory violations. In addition, we are continuously enhancing our commercial service capabilities. We've begun internal testing of our ticketing system, optimizing the boarding process to improve passenger experience, and are exploring ways to improve efficiency, particularly through dual vertiport operations and running an operator training program for EH216-S, conducted under the CAAC authorized trial program for large civil unmanned aerial vehicles. In Q3, our two operators will continue increasing flights to collect valuable operational data.
Meanwhile, we will remain in close dialogue with the NDRC's Low Altitude Bureau and related regulators. Our goal is to officially launch commercial eVTOL services to the public within this year. Going forward, both operators will add more vertiports to build up capabilities for cross-regional and managed operations. Meanwhile, route operations from point A to point B are also progressing steadily, with both ferry flights and blast test flights already underway. Simultaneously, we are supporting more of our customers with their operator certificate applications, helping with route design, vertiport planning, and personnel training to build a robust customer service system. Our team has completed the operator training needs assessment, and the training outline has been approved by the regulator. Course development is now fully underway. Once the teaching materials are finalized and submitted for review, operator training and assessment will officially begin.
This operator qualification will help address the shortage of skilled personnel and enable more applicants to meet their OC personnel requirements. As Mr. Hu just mentioned, the key focus for our business this year is the launch of commercial operations. Following a prudent assessment, we've adjusted our 2025 full-year revenue guidance to approximately RMB 500 million, up from RMB 446.2 million in 2024, reflecting modest growth. This adjustment isn't due to weak demand; it reflects our unwavering commitment to safety and a strict alignment with sustainable aviation protocols. We are investing in the necessary time and effort needed to optimize our commercial operation processes and manage risks effectively, ensuring that our demonstration flights are high-quality and scalable.
For customers who have already purchased our aircraft, we are dedicating significant resources to offer comprehensive operation solutions tailored to their diverse operating conditions, ensuring safe deployment and a gradual transition into regular commercial operations. This phased guidance adjustment isn't a step back; it's designed to enable more efficient, sustainable commercial expansion down the line. By building a solid foundation now, we have positioned the company for medium to long-term growth and preparing to elevate both product sales and revenues to new heights. Meanwhile, we are accelerating our market expansion by partnering with top-tier ecosystem allies. In May, we extended our strategic collaboration with the China Communications Information and Technology Group to include the CCCC-FHDI Engineering Company, forming a powerful multi-party alliance. We will jointly launch demonstration projects in low-altitude tourism, urban air mobility, emergency response, aimed at building a three-dimensional infrastructure network to support scalable demonstration models.
Our partnership also extends into international markets by delivering CCCC-FHDI's exceptional expertise in infrastructure development within complex environments such as coastlines, rivers, and islands. We are co-developing integrated land-water-air mobility solutions. These solutions are designed to be deployed across Southeast Asia and South Asia. In May and June, we formed strategic partnerships with China Mobile and China Unicom to jointly advance R&D, data platform services, UAV communication technologies, and related application expansion in the low-altitude economy. By combining resources and leveraging complementary strengths, a new UAV management service platform has been deployed, which will significantly enhance safety for low-altitude flights by leveraging real-time data from telecom operator base stations. This quarter, we have made significant progress in logistics applications, partnering with the Wanyi Tianxia Zhuhai Aviation Company.
Our VT20 series logistics eVTOL completed the first long-range intercity cargo flight in the Greater Bay Area, covering 83 km between Zhuhai and Guangzhou in about 55 minutes. The route reduced transport time by up to an hour compared to road transportation, demonstrating a significant improvement in logistics efficiency. The VT20 series has now operated safely for over a year in the Wanshan Archipelago, gradually establishing a comprehensive land-to-island and inter-island drone logistics network across the region. On the manufacturing front, while expanding the infra production base, EHang is also planning new facilities in Fangcheng, Hefei, and Weihai to serve different regional functions, including assembly and production of passenger logistics and emergency response aircraft to cover different regions across China. This layout will enable localized production and delivery based on the product type and customer location. Internationally, we continue to extend our global presence.
In the Second Quarter, the EH216-S completed demo flights in Mexico, Indonesia, and the Dominican Republic. These bring our global eVTOL flight footprint to 20 countries. At this year's Paris Air Show, our flagship EH216-S captured global attention not only from aviation professionals but also from ICAO council members. During the show, EHang signed strategic MOUs with the two partners, ANRA Technologies and FAdeA, Argentina's national aerospace manufacturer. We will jointly advance digital aerospace infrastructure development and localized certification across Europe and Latin America. In Q2, we completed test flights for the EU's U-SAVE project at our European UAM center and renewed our flight permit for our Spain UAM operations center, ensuring continued progress of trial operations in Europe. In Latin America, we joined the region's largest aerospace exhibition in Mexico, where we also showcased successful demo flights.
We also held a tri-party meeting with the CAAC and the Mexican Civil Aviation Authority to advance validation of type certification for the EH216-S. Meanwhile, we're pursuing type certification in Brazil and a special flight permit in Chile. In the Middle East, the EH216-S has received a human-carrying flight approval in Qatar, and we are now preparing routes and aircraft deployment. We also signed a strategic partnership agreement with Turk Telecom and are planning the first demo flight in Turkey. In Southeast Asia, we made significant progress with the Thai regulators to advance in commercial operations. We plan to run trial flights in Bangkok and Pattaya area under a regulatory Sandbox program while preparing for future trial commercial operations in the designated airspace. Looking ahead, we'll continue to advance commercialization with safety as our top priority.
Supported by our increasingly competitive products, strong industry collaboration, and expanding global footprint, we're confident in EHang's potential for sustained long-term growth. Now, I'll turn it over to our CFO, Conor, to walk us through the financial results.
Hello, everyone. Before I go into the details, please note that all numbers presented are in RMB, unless otherwise stated. A detailed analysis is available in our earnings press release on the IR site. Now, I will present some key financial data. Total revenues were RMB 147.2 million in Q2 2025, an increase of 44% compared with Q2 last year, and a significant sequential increase of 4.6x compared with Q1 2025. These year-over-year and sequential increases are primarily driven by increased sales volume of EH216 series products.
As our COO mentioned earlier, OC issuance has significantly boosted customers' interest in our products, which resulted in more active order conversion in the Second Quarter. Gross profit was RMB 92.07 million in Q2, showing both year-over-year and sequential growth driven by increased revenues in the quarter. The gross margin in Q2 was 62.6%, remaining stable compared with 62.4% in both Q2 2024 and Q1 2025. This indicates that our products maintain sustained market competitiveness and stable pricing power. Turning to expenses, total operating expenses in Q2 were RMB 173 million, representing increases on both a year-over-year and quarter-over-quarter basis. This was primarily due to our continued business expansion and increased R&D investment, which translated into higher staff compensation. The adjusted operating expenses for the Second Quarter, which excluded share-based compensation expenses, were RMB 96.85 million, representing a year-over-year increase of 37.2% and a quarter-over-quarter increase of 52.3%.
This increase was mainly due to the company's accelerated pace of commercial expansion, with the corresponding workforce growth resulting in an overall increase in staff composition. Additionally, our continued investment in new aircraft models and technologies also contributed to higher R&D expenses. Adjusted net income was RMB 9.4 million, i.e., excluding share-based compensation expenses and the one-off non-operating provisions made for the settlement fee of legal proceedings related to the U.S. Securities Class action filed in 2023, making a remarkable 719.9% increase from RMB 1.2 million in the Second Quarter of 2024 and a return around from the adjusted net loss of RMB 31.1 million in the First Quarter of 2025. Since Q2, the company raised over $23 million through the market offering.
The proceeds will mainly be used for the company's research and development of next-generation technologies and products, team and production expansion, establishment of new headquarters, commercial operations, working capital, and general corporate purposes. The company continues to have strong capital reserves as of June 30, 2025. Our cash and equivalents restricted to short-term deposits and short-term investments totaled RMB 1.15 billion. This solid financial foundation gives us the flexibility to support future R&D investments, expand production, and grow our commercial operations. Given our strategic focus for the second half of the year is on operational execution and supporting customers in achieving safe and regular operations, we have made a prudent decision to moderate the pace of order deliveries. As a result, we have adjusted our full-year 2025 revenue guidance to a promising RMB 500 million.
By focusing on strengthening our commercial operations foundation, we are strategically transitioning our revenue model to a dual-engine approach, combining eVTOL manufacturing and operational services. With the steadily expanding and more diverse product portfolio, we expect our revenue mix to become increasingly balanced, supporting EHang's long-term sustainable growth and delivering enduring value for our shareholders. Thank you.
Please hold for a moment. We will begin the Q&A session shortly. Thank you. If you'd like to ask a question, please press star and the number one on your telephone keypad. Our first question comes from the line of Tim Hsiao from Morgan Stanley. Please go ahead.
[Foreign Language]
Thank you, management, for taking my question. This is Tim from Morgan Stanley. I got two questions. One is on the material cuts to the revenue guidance for this for next year. I would like to know more about the reasons behind this. Why? Because the management has talked a little bit about that. I wonder why do we choose at this time point to adjust our growth strategy. Is it because of the external factors, or is it because of the market or any challenges that we're facing on the operational level? Why is the company, you know, taking this prudent approach when it comes to deliveries?
As you revise down the revenue guidance as well as the delivery pace, I was wondering whether we have a lot more visibility into the deliveries in the second half of the year because we have delivered significantly a lot more in the first half as the current data suggests. We'd like to know more about that. Thank you.
[Foreign Language]
This is Whang Zhao . I will take your question. You're right. In the second half of the year, we have made strategic adjustments to our overall company strategy. That's because we have obtained the OC. That's when we started to focus more on the operations. The focus is to shift on providing more support services to existing clients to help them establish regular operations for the products they have already purchased safely and systematically.
[Foreign Language]
I would like to emphasize that the adjustment is not due to insufficient market demand, but rather because we want to maintain safety as our core principle and adopt a more prudent development strategy. We are not blindly pursuing rapid short-term expansion, but instead focusing on safe and sustainable commercial operations. Therefore, we have cautiously lowered our full-year revenue guidance based on our current order. That's that.
[Foreign Language]
Based on the current order backlog at hand, we are confident in achieving the full-year revenue target of RMB 500 million.
[Foreign Language]
The second question is on OC because the two EH216-S operators have obtained the operating certificates from the CAAC in Q1. I was wondering if management could share more color or give us an update on the progress as well as the process in terms of the OC application on the client side. Could management give us an update on that? Thank you.
[Foreign Language]
This is Zhao Wang. I will answer this question. After the two operators obtained the certificates, they are now adopting a phased operational approach and are currently in the second phase of passenger trial operations. They're continuously optimizing the processes and services. They are exploring the dual helipad operation model. This is to increase the commercial value.
[Foreign Language]
I would like to emphasize that the existing customers saw that our operators have obtained the OC. They have shown significant interest in this. Also, we are now widely recognized by the market. There's a lot of attention on us. I would say that the OC instills a very strong confidence in the current customers as well as the potential customers.
[Foreign Language]
Right now, our clients have two options in front of them. One of them is that they can put together a dedicated team, put together all the information required for the OC application process. During this process, we would provide full technical support in their OC application. The other model for the client is to go through the hosting for agent approach, where we would apply the OC on their behalf. Both models are progressing fairly well at the moment.
[Foreign Language]
Thank you.
Thank you. Our next question comes from the line of Fuyin Liang from Bank of America. The line's open.
[Foreign Language]
This is Fuyin from Bank of America. Thanks, Q3. I got two questions. One is on the order backlog. What is the breakdown for the orders that are currently at hand? I mean, in terms of how many of them are from domestic customers and how many of them are from overseas customers, and whether that provides any visibility in terms of the conversion rate for the orders from the year after and the year after next. Thank you.
[Foreign Language]
This is Conor. I'll take your question. In Q2, we obtained 115 new orders. I want to emphasize that these are not a framework of agreements. These are purchase agreements that we have signed with these customers. These orders, the clients will purchase these devices, so we'll take the order with us in batches, and that will convert into actual sales and revenue. To give you a rough breakdown, 90% of the sales are with the domestic clients, and 10% of them are with overseas customers. Thank you.
[Foreign Language]Forein
There is a trend that we have spotted that there is a significant more demand for our pilotless vehicles from the overseas market. There are several orders of significant volume that are in negotiation. We will disclose them whenever we finalize the purchase agreements. However, we want to, you know, emphasize that there's a lot more demand for our pilotless vehicles from the overseas market. That's the trend that we have spotted. Thank you.
[Foreign Language]
My second question is on the VT20 model, because we have saw that we debuted the model in the Zhuhai exhibition in July, and we are aware that this model has been under flight testing for roughly a year. We also noticed that, you know, particularly the test flights have been conducted in the Greater Bay Area. Do we have any plans for airworthiness certification and commercialization of this model? Thank you.
[Foreign Language]
This is Wang Zhao . The VT20 series logistic aircraft currently operating regularly in Zhuhai are small UAVs that do not require airworthiness certification. The large logistic aircraft models that are still being refined do require airworthiness certification. Given the experience that we have in the application of airworthiness certification application, I think the progress will be much faster than the previous four models. Thank you.
[Foreign Language]
In the progress of developing any new models or rolling out any new model, we always place our top priority on safety. We aim to achieve sustainable long-term commercial operations for all of these models that we have rolled out. Our approach is to start with these smaller sized logistic models and gradually transfer or transition or shift to those large logistic models. We do have commercial plans for these large commercial pilotless vehicles in the future. Thank you.
[Foreign Language]
Yeah, that concludes my questions. Thank you, management, for answering my questions.
Thank you. Our next question comes from the line of Alan Lau from Jefferies. Please go ahead.
[Foreign Language]
This is Alan from Jefferies. Noticed that we've made a strategic adjustment in terms of the revenue guidance. I'm wondering, will we notice a notable or material increase in the revenue growth for next year? That's your first question.
[Foreign Language]
This is Conor . We have mentioned that we are going to place a lot more of our focus on safety, and we're going to put more efforts into preparing some of these projects and build them into demonstrating projects across nationwide. That's the strategic adjustment that, based on that, we have made a strategic adjustment of slowing down the deliveries for the second half of the year. However, we are confident that we are going to have a significant faster growth for next year. I think with, you know, about half a year time, you know, that would be sufficient for us to make the adjustment.
[Foreign Language]
Next question is on orders from the overseas market. Recently, your competitors have signed many overseas markets. We also noticed that EHang has signed an order with a Japanese client. I was wondering, could the management share the company's overseas business progress, such as any progress or sales breakthroughs in Thailand or Japan? On the order volume level, what would that be? Can management give an update on that? Thank you.
[Foreign Language]
This is Conor. We did notice a stronger demand from the overseas market, and our goal is to obtain commercial operations within six months. Our collaboration with the Thailand regulators has been progressing fairly well in terms of moving into commercial operations. Right now, our approach is to deepen the sandbox testing model. In the first phase, we'll conduct many, many test flights along the Pattaya and Bangkok area. Our hope is to achieve commercial operations after obtaining the certificates from the Thailand regulators. Once that has been proven successful, we can replicate and bring this model, expand our commercial operations into many other islands, tourism islands in Thailand, for example, Sumi Island. I believe this would serve as a role model for many potential markets in Southeast Asia. One thing to note is that this sandbox-based test is for from point A to point B.
Once we obtain the certificates for this commercial operation, this would also provide a lot more experience in terms of helping to secure commercial operations in China. Thank you.
[Foreign Language]
Another similar project or test flight we are advancing is the Sandbox test area in UAE, Abu Dhabi. We are partnering with a local partner. We are conducting test flights and also obtaining the certificates from the local regulators. Like I said, this is a point A to point B rep test flight.
[Foreign Language]
Thank you, management, for your answers. That's pretty clear. Thanks.
Thank you. Our next question comes from the line of Rongyan Zhou from CITIC. The line's open.
[Foreign Language]
This is Rongyan Zhou from CITIC. I was wondering, in the previous strategic model, our production is actually based on our sales. I was wondering if we, after making the adjustment on the revenue reduction, I was wondering if we would still pursue the production-based expansion plan with an annual production capacity of 1,000 units. With that, will that feed into, will that be any changes in terms of the 2025 CapEx? Thank you.
[Foreign Language]
This is Conor. We would continue to pursue our production-based expansion in the windfall. In windfall, the annual production capacity, according to plan, is 1,000 units per year. That would guarantee our future deliveries. In terms of the production expansion, I think that will reflect on some changes, you know, based on the estimates of deliveries, but we'll continue to expand for two reasons. One is to prepare for the long-term demand of different customers. Second, this expansion is to prepare for deliveries of diverse models, including the VT30 model, as well as many fire rescue or firefighting models.
[Foreign Language]
In terms of the 2025 CapEx, that would remain consistent with our U.S. disclosure, that is at $14 million and remain unchanged in terms of the 2025 capital expenditure guidance.
[Foreign Language]
All right. Thank you, management.
Thank you. Our next question comes from the line of Laura Li from Deutsche Bank. The line's open.
Thank you for taking my question. I'd like to ask, how should we think about your business model as a vehicle service provider, as you mentioned earlier? Basically, what's your role and how's the revenue generation going to be like? Also, will this be a long-term strategy or mostly just for the initial stage of operations?
[Foreign Language]
I think that it is an in-time adjustment to the development phase of the UAV sector. Previously, in a couple of years, we put most of our efforts in pursuing VOC, making sure that we can produce an order that can fly and that can be sold. The strategic target for this year is to make sure that we will pursue commercial operations for these existing clients.
[Foreign Language]
I think it's very hard to start any new business or a new initiative. I think our success in obtaining the airworthiness for our very first UAV model has proven the success. At this moment, our goal is to pursue sustainable long-term commercial operations for this model. We admit there is going to be a lot of challenges and obstacles along the way. However, we are confident in overcoming them. Every time we made a breakthrough in terms of the challenges that we made, it instills a sense of confidence into the market.
[Foreign Language]
Going forward, our business model will be positioned as an eVTOL producer plus an operation service provider. We will be providing supporting services for all of our clients, ensuring that they can fly their eVTOLs safely. All of our efforts, for example, in conducting the test trainings, et cetera, are positioned to address all the challenges encountered by our clients. We are confident that in advancing the industry, along the way our efforts together.
[Foreign Language]
With all these hurdles cleared, we are able and going to deliver more UAVs to our clients going forward. Thank you.
Thank you for the color. My second question is actually about the VT35. I think you mentioned the support from the, let's say, government of like RMB 500 million. Any breakdown of this number? I mean, is this mainly the eVTOL orders or mainly the infrastructure buildout or some shared cost or R&D?
[Foreign Language]
[Foreign Language]
This is Wang Zhao . Yes, on the VT35, to give an overview, this is a new model rolled out by EHang, and we have submitted the model, the type certification. We have actually informed the CAAC about this model in February. Now we are advancing the airworthiness application process. Today we made the announcement of signing the strategic partnership with the Hefei Municipal Government, and we are going to bring this new model into Hefei and make it our base for this new model.
[Foreign Language]
RMB 500 million support from the Hefei Municipal Government comes in the format of orders, investment, as well as the supply chain support. Support from Hefei Municipal Government will definitely push the development of the VT-35 model. Thank you.
Okay, appreciate it. Thank you.
[Foreign Language]
Thank you. Our next question comes from the line of Yu Chen from GF Securities. The line is open.
[Foreign Language]
This is Yu Chen from Guanfa Securities. I got two questions. The first question is whether management could give us a breakdown in terms of the six to eight EH216 units sold in Q2, how many of them are from domestic customers and how many of them are from Japanese customers, as well as the breakdown for the 150 new orders that we've signed, what's the breakdown between overseas and domestic markets? The second question is on the solid-state battery initiative. Are there any updates on that? Thank you.
[Foreign Language]
Thank you, Conor. In terms of the 68 units that's delivered in Q2, they are the EH216 series. To give you a breakdown, 67 of them are EH216-S models, and one of them is the EH216-L model, the logistic version. They are delivered to 13 customers, 12 of them are from domestic customers and one from Japan.
[Foreign Language]
In terms of the 150 units, these are firm orders with a signed purchase agreement. To give you a breakdown, 90% of them are from domestic customers and 10% of them are from overseas markets.
[Foreign Language]
This is Wang Zhao . I'll take your second question on the solid-state battery initiative. Currently, the company is adopting a two multi-battery R&D strategy. That means we are pursuing multi-channel cooperation plus multi-directional deployment. We are exploring the optimization opportunities for our systems. At the moment, we have established partnerships with battery manufacturers, including Gotion High- Tech and Xinjiang Energy, to explore the different battery solution development directions.
[Foreign Language]
All right, thank you for your answers.
[Foreign Language]
Okay, to elaborate on the question, just to make a quick add, there are several directions that we're exploring with the battery R&D. Firstly, we are working to resolve the challenges of battery fast charging and discharging and lifespan issues to increase the daily flight operations. The second direction is to develop universal low cyclical batteries to reduce the adaptation costs. The third one is to do research on the semi-solid-state batteries.
[Foreign Language]
The last direction we are working on in battery R&D is the solid-state battery development, which has achieved a significant result. EHang is the world's first to install solid-state batteries on eVTOL aircraft and conduct actual flights, as we have demonstrated in the last two years, last year. We have successfully increased the flight duration to 48 minutes. Last year, we have successfully brought it to 66 minutes now. Currently, our firefighting and logistic aircraft can exceed one hour of flight time. One thing to note is that we are actively applying for the airworthiness for the solid-state battery on the eVTOL model. We are submitting the application to be reviewed and successfully granted by the end of the year. Thank you.
Thank you. Seeing no more questions in the queue, let me turn the call back to Ms. Anne for closing remarks.
[Foreign Language]
Thank you all again. This concludes the call. You may now disconnect.